Car Finace Woes

A question about : Car Finace Woes

Hi all

Looking for some advice please,

I purchased a new Ford Focus in March 2013 as part of a PCP deal putting 3.5K from a part exchange of my older vehicle into the equation. The Contract is now coming to an end and the car has a GMFV of around Ј7.5k . I was told at by the dealer at the time of purchase that the car would likely be valued at more than this and the difference I could use as equity towards a new car.

Unfortunately, things didnt quite work out that way and the car has been valued (by the dealer and independently) at around the GMFV therefore leaving me with little to no equity.

The dealer has offered a brand new fiesta for the same amount of money I am paying currently (another 2 years deal) with a Ј250 deposit when I trade in the Focus. I am now a bit weary as I dont want to be left in the same situation 2 years down the line and having to shell out the same or more money for a lesser car (seems to be a downward spiral).

I have been to my bank and they have offered a 4 years fixed rate deal for the Ј7.5K, which basically means I will be paying the same amount per month to the bank as I was to the car finance company, the caveat being that I will have a 6 years old Focus by the time I stop paying.

I was wondering what would be the best course of action in this case.

Thanks
S

Best answers:

• If you like the Focus, get the loan and buy it. At least it will be yours at the end, unless you need a brand new car.
• It's all a trap to keep you tied to finance for the rest of your life.
  Get a loan, buy a car, repay the loan, sell the car, buy a car, save.
• They always use the line of "It'll have more equity than that" and it is true sometimes. More-so if you sell the car privately.
  What rate is the loan that the banks offered you? If it's ~5% I'd just take that and buy the car. Nothing wrong with having a 6 year old ford.
• Thanks all
  It would appear that the Loan they are offering is at 12%. Ive tried others offering ~5% online but apparently my credit rating is not good enough. Have no idea why.....paying up all my credit cards on time etc.
  Effectively Ill be paying around 2K in interest but at least ill have some equity at the end of the 6 years to put a deposit down on another car. I know ill be paying more in the long run but the monthly cost is exactly the same so I wont feel it on the purse strings if you know what I mean.
• You are not tied to Ford. Try any other dealer you fancy and see what they offer.
• Interesting - I was told by the sales rep at Ford I was.....
  I thought things were a bit awry when he made a fake phone call to his imaginary boss to get a 'better' deal for me.
• Hand the car back and take out a loan for another one.
• Christ, I wouldn't take out a 12% loan to pay it off.
  Does this car meet your day-to-day needs? Do you see any reason you might need a bigger car in the future?
  You could try and look at other dealers to see what cars they've got and for what price - remember, you can always negotiate on the cash price of the car and then finance it with them.
• I suppose I am justifying it by thinking that the ~2K interest I'll pay will nullify itself with the inference that the car will be worth around 2K at the end of the loan - I can then go on and use that as equity for another car so Im not sure how I would be out of pocket effectively?
  My head is burst so my logic might be all wrong :P
• I phoned ford finance and had it confirmed that the I can go to any dealer and any manufacturer as suggested here. Have to say, Im really not impressed with my current dealer telling me that I had to part ex the car with them after the contract ended.......
  At least my options are not so limited now.
  Thanks all
• Hi, I am a ford employee and quite experienced in this scenario as I work in a factory with most colleagues buying and selling cars on a daily basis. What you have is options and the ford finance would normally be below 12% if you wanted to buy the car outright. I personally have never bought a car on options I have always financed it with a personal loan for the very reason you find yourself in now. Not that I am preaching I am right it's just I dont trust the dealers. my wife has bought her last 3 cars on options and it has worked out okay when they ave been changed after 9 months (the time we have to keep them with a discounted price)
  The problem with fords is that they depreciate so much. The secret with options is not to put any of your money down as a deposit and see if you can afford the monthly payments, if not don't bank on getting it back at the two years. Also when you buy the car go for a basic model such as a zetec with no extras and solid paint. You will never recoup the extras when it comes to gfv or very little anyway. The good thing about options is you have little in the way of maintenance especially if you trade it in after 9 months as you dont have to keep it the full two years,
  PM if you want to discuss further if buying another ford as I have friends who are salesmen